In a recent interview with CNBC’s Geoff Cutmore, Swatch CEO Nick Hayek didn’t pull any punches when it came to France and the United States. Seemingly utterly unimpressed by what France is offering tourists and a strong-worded critic of U.S. malls and department stores, Hayek found few redeeming qualities in the two countries. The Chinese consumer, China’s government, and Alibaba, however, were among the main subjects of the Swatch CEO’s praise.
It should perhaps not come as a surprise that Swatch, with its swathe of luxury brands spanning everything from hyper-luxury to entry range, is a major beneficiary of the rise of the Chinese luxury consumer, as well as consumption in China as a whole. Consequently, Swatch Group is also a major stakeholder in Chinese outbound tourism—with much of its revenue sourced from Chinese tourist consumption.
When being asked about the so-called “return of the Chinese consumer” in the last 12 months, Hayek insisted that it’s not a question of a “return,” but rather of changing consumer behaviors. “He was always there. He just bought in different places. He just changed a little bit his behavior. He bought sometimes not so much luxury products anymore or high end but he bought the mid-range products and he was never away,” Hayek told CNBC.
“Of course he wasn’t very motivated to go to France, too many French people there”
In France, however, Hayek sees things differently. “Of course [the Chinese consumer] wasn’t very motivated to go to France, too many French people there. You have to have some special way to treat foreigners when they come into the country. Ever taken a taxi in Paris? So you know what I’m talking about.”
So while perhaps not bullish on Chinese consumption in France, Hayek still praised the “fantastic Chinese consumer,” as responsible for growth both at home in China and in other countries. Doubling down on his praise for China, Hayek emphasized that the Chinese government is doing things right by fueling the growth of the country’s middle class, and that this is exactly what will benefit Swatch.
Taking the praise for the Chinese government even further, Hayek said that he backs Xi Jinping’s anti-corruption efforts, describing corruption as always bad for the middle class and that Swatch needs the Chinese middle class to grow. While admitting that the anti-corruption campaign may have resulted in a reduction of luxury watch purchases for gifting, Hayek still underlined that the anti-corruption campaign is ultimately good for the company.
The anti-corruption campaign is ultimately good for Swatch Group
Hayek also went on to blast U.S. department stores and malls for both being overly cautious with stocks, as well as complaining about inadequately trained sales staff and an uninspiring sales environment. Meanwhile, Hayek praises the customer service and “emotional experience” that malls in Asia are able to provide their customers.
Most surprising of all, perhaps, is that Hayek compared Alibaba favorably to Amazon, praising the Chinese company for actively combating fake products in a way that Amazon allegedly doesn’t, “The Chinese are doing it. They fight against it.” It should perhaps be pointed out that Alibaba’s Taobao marketplace is listed for the second year in a row on the U.S. Trade Representative’s Office “Notorious Marketplaces” blacklist over sales of counterfeit goods and violations of intellectual property rights.
The long and short of it all is that Swatch Group’s CEO is a big fan of China, its government, and its consumers—and is clearly bullish on the future of Chinese consumerism. Overseas retailers, meanwhile, seem to have a lot to learn from their Asian counterparts in Hayek’s book. As long as China’s middle class keeps growing, Swatch expects to cash in—no matter where the purchases are made.